Teaching Comparative Government and Politics

Monday, February 01, 2016

What will change?

Will the end of sanctions because of the nuclear weapons program change Iranian politics? economics? regime?

Waiting for the peace dividend
Hassan Rohani, Iran’s president, [wasn't] able to enjoy the [end of sanctions].
Guardian Council
Within days of the announcement the Guardian Council, a body of jurists and theologians, barred a majority of reformist candidates from running in parliamentary elections next month. Then on January 18th America slapped new sanctions on those involved in Iran’s missile programme.

Yet the next few weeks… will be crucial in determining the direction that Iran takes over coming years. Next month the country also votes for members of the Assembly of Experts… To keep the hardliners at bay, Mr Rohani, who himself must seek re-election next year, will have to persuade them of the virtues of a more liberal, less state-run, more outward-looking economy.

To do so he has to hope for a quick turn in the fortunes of the world’s 18th-largest economy (by purchasing-power parity). Yet overcoming the lingering effects of its isolation will be no easy task…

Iran’s economy is far more diverse than those of other oil producers in the region, such as Saudi Arabia, its regional rival. By most estimates its GDP could grow by 5-8% a year, despite weak oil prices.

Quite apart from the lifting of sanctions, Mr Rohani’s team realises that it needs to address a raft of problems in an economy that was sorely mismanaged by Mr Ahmadinejad. Corruption is rife: Transparency International… ranks Iran 136th in its corruption perceptions index. In addition, the World Bank puts Iran at a lowly 118th in its ease-of-doing-business index. Capital markets need developing. Firms need access to finance. Unemployment and underemployment are rife and labour productivity is low. Now that sanctions are being lifted, the regime will no longer be able to blame foreigners for Iran’s woes. Yet unless he can show quick progress, Mr Rohani may well be punished at the ballot box for the sins of his predecessor.

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